Capri Holdings Reports Strong Q3 Earnings Despite Revenue Decline
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 3d ago
0mins
Should l Buy CPRI?
Source: seekingalpha
Capri Holdings Ltd's stock fell by 9.20% as it hit a 20-day low amid broader market declines, with the Nasdaq-100 down 0.87% and the S&P 500 down 0.39%.
The company reported Q3 revenue of $1.025 billion, a 4% year-over-year decline, but adjusted EPS of $0.81 exceeded market expectations, showcasing resilience. Additionally, the sale of Versace allowed Capri to significantly reduce its net debt to $80 million, enhancing financial flexibility for future investments. Despite the revenue drop, the company maintains an optimistic outlook for FY 2026, projecting total revenue between $3.45 billion and $3.475 billion, which reflects confidence in future growth.
This performance indicates that while Capri is facing challenges in revenue, its strong earnings and debt management may position it well for recovery. Investors may view the company's strategic initiatives and optimistic guidance as positive signs for long-term growth.
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Analyst Views on CPRI
Wall Street analysts forecast CPRI stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for CPRI is 26.73 USD with a low forecast of 22.00 USD and a high forecast of 32.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
15 Analyst Rating
6 Buy
9 Hold
0 Sell
Moderate Buy
Current: 19.670
Low
22.00
Averages
26.73
High
32.00
Current: 19.670
Low
22.00
Averages
26.73
High
32.00
About CPRI
Capri Holdings Limited is a global fashion luxury company, consisting of brands, such as Michael Kors and Jimmy Choo. Its Michael Kors segment includes the sale of Michael Kors products through four primary Michael Kors retail formats: Collection stores, Lifestyle stores (including concessions), outlet stores and e-commerce sites, through which it sells Michael Kors products, as well as licensed products bearing the Michael Kors name, directly to consumers throughout the Americas, certain parts of EMEA and certain parts of Asia. It also sells Michael Kors products directly to department stores, primarily located across the Americas and Europe, to specialty stores and travel retail shops, and to its geographic licensees. Its Jimmy Choo segment includes the sale of Jimmy Choo luxury footwear, handbags and small leather goods through directly operated Jimmy Choo retail and outlet stores throughout the Americas, certain parts of EMEA and certain parts of Asia, through its e-commerce sites.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Significant Debt Reduction: The completion of the Versace sale allowed Capri to reduce net debt from $1.6 billion to $80 million, enhancing financial flexibility and supporting future strategic investments, which is crucial for long-term growth.
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- Strong Financial Performance: Capri Holdings reported total revenue of $1.025 billion for Q3, down 4% year-over-year, yet earnings per share rose approximately 30% to $0.81, indicating improved profitability under strategic adjustments and boosting investor confidence.
- Significant Debt Reduction: The completion of the Versace sale allowed Capri to reduce net debt from $1.6 billion to $80 million, enhancing financial flexibility and supporting future strategic investments, which is crucial for long-term growth.
- Brand Strategy Adjustments: Revenue for Michael Kors declined by 5.6%, while Jimmy Choo saw a 5% increase, reflecting the company's efforts in brand repositioning and market strategy, which are expected to lay a solid foundation for sustainable growth.
- Optimistic Future Outlook: Management narrowed full-year fiscal 2026 revenue guidance to between $3.45 billion and $3.475 billion, with an anticipated gross margin of 61%, demonstrating confidence in future growth driven by ongoing strategic investments and disciplined cost management.
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- Significant Debt Reduction: The sale of Versace enabled Capri Holdings to reduce net debt to $80 million, down from $1.17 billion a year ago, enhancing financial flexibility and securing the foundation for future strategic investments.
- Differentiated Brand Performance: Michael Kors generated $858 million in revenue, a 5.6% decline, while Jimmy Choo's revenue increased by 5.0% to $167 million, indicating positive outcomes in brand portfolio management and potential for further resource optimization.
- Optimistic Future Outlook: The company anticipates total revenue of approximately $3.45 to $3.475 billion for FY 2026, reflecting confidence in future growth and providing clear earnings expectations for investors, thereby bolstering market confidence.
See More
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- Strong Cash Flow: The company generated $271 million in cash flow from operating activities in Q3, with capital expenditures of $19 million, resulting in a robust free cash flow of $252 million, enhancing financial flexibility for future investments.
- Significant Debt Reduction: As of December 27, 2025, Capri's net debt decreased to $80 million from $1.17 billion a year earlier, indicating substantial progress in debt management and improving the company's balance sheet.
- Optimistic FY 2026 Outlook: Capri anticipates total revenue for FY 2026 to range between $3.45 billion and $3.475 billion, surpassing consensus estimates, with projected EPS of $1.30 to $1.40, reflecting strong confidence in future growth prospects.
See More
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- Diverse Brand Performance: Revenue for Michael Kors fell by 5.6%, while Jimmy Choo saw a 5% increase, suggesting effective brand management that may lead to increased investment in high-performing segments moving forward.
- Debt Management Success: Capri significantly reduced its debt levels to $80 million by utilizing proceeds from the Versace sale, demonstrating positive progress in financial stability that will facilitate future capital operations.
- Optimistic Outlook: The company anticipates FY26 total revenue between $3.45 billion and $3.475 billion, with adjusted EPS expected in the range of $1.30 to $1.40, reflecting a confident outlook for growth and a strategic foundation for sustainable performance.
See More
Capri Holdings Exceeds Expectations in Q3 Fiscal 2026 Results
- Strong Financial Performance: Capri Holdings reported $1.025 billion in revenue for Q3 Fiscal 2026, reflecting a 4% year-over-year decline but exceeding market expectations, indicating effective execution of brand strategies.
- Significant Debt Reduction: The sale of Versace allowed Capri to reduce its net debt to $80 million, enhancing financial flexibility to support strategic investments in Michael Kors and Jimmy Choo, thereby increasing long-term shareholder value.
- Ongoing Brand Strategy: CEO John D. Idol noted that strategic initiatives for Michael Kors and Jimmy Choo are progressing steadily, with expectations to lay the groundwork for growth in Fiscal 2027, reflecting confidence in future market conditions.
- Cautiously Optimistic Outlook: Despite facing global macroeconomic uncertainties, Capri maintains an optimistic outlook for the future, emphasizing continued focus on the potential impacts of currency fluctuations and inflationary pressures on performance.
See More
